ISLAMABAD: If PML-N stalwarts, their ambitious consultants and economists are confused about which economic road they should take, they may rest easy knowing that their work has already been done. A new framework for economic growth is ready – it was prepared two years ago by their opposition.
The Planning Commission – led until recently by Dr Nadeemul Haque – had announced a long-term strategic document in 2011, titled the ‘Framework for Economic Growth’.
The Framework for Economic Growth was discarded by the socialist-leaning PPP government, but it can serve as a potent reference tool for the more capitalist PML-N government. If the new government does not want to waste time over consultations over its development roadmap, it must adopt the Framework for Economic Growth with a strong will.
The new government should seriously consider implementing all recommendations made in the Framework. A few key recommendations were: the reestablishment of a unilateral trade liberalisation program; the immediate abolition of the present system of distortive regulatory duties (SROs) that interfere with the tariff structure; maintain a neutral real exchange rate policy; immediately abolish the ad hoc system of quasi-import licensing administered by various line ministries; and thorough revision of the economic justification for sectors/industries benefiting from above normal protection and/or subsidies, export subsidies, export taxes, and anti-dumping practices.
Everything which the Framework for Growth suggests does not have to be taken on its face value. Particularly, its recommendation to make the Planning Commission the centrepiece of the entire reform process is self-serving and counterproductive. The Planning Commission itself is a creation of the state-led growth narrative, and if Haque’s argument is taken full circle, the Planning Commission is the first institution which should be abolished.
The Public Sector Development Programme (PSDP) must be decentralised and cities should be empowered to undertake all development projects after abolishing all central bodies, committees and commissions. In the new economic vision, there is no place for over-reaching, centralised decision making.
In the short run, at least half of the PSDP budget must be ring-fenced to drastically reduce the circular debt, which has marred our entire economic value chain. This single measure will infuse a new spirit in the economy as it will help reduce load-shedding by at least 25-50%. Pakistan can survive without a new bridge or dam or school – but it can thrive with reliable energy.
The other key decision which must be made is to reverse the restructuring of state-owned enterprises initiated by the previous government. The PML-N government must start business from where it left off and declare a complete privatisation roadmap. Instead of finding angels to run state-owned enterprises, the new government must revive that materialist, self-interest propelled, wealth-enhancing regime – private owners in a competitive framework.
Lastly, the centrepiece of economic strategy for the new government must focus on reorientation of the role of government. From a service provider and market participant, it must become a guarantor of property rights and the sanctity of contracts.
the writer IS THE FOUNDER AND EXECUTIVE DIRECTOR OF PRIME, A FREE MARKET ECONOMY THINK-TANK BASED IN ISLAMABAD
Published in The Express Tribune, May 27th, 2013.
Like Business on Facebook to stay informed and join in the conversation.